‘Boring junk’ is the key to this portfolio manager’s success

Eric Bushell, chief investment officer of CI Investments, says ‘careful and diversified’ is the way to invest now

By: MARY GOODERHAM

Date: April 23, 2015

A student of history, Eric Bushell says he is always learning the lessons of world events and markets and applying them to his investing strategies.

As senior vice-president of portfolio management and chief investment officer of Signature Global Asset Management, a division of CI Investments Inc., he leads a team responsible for managing more than $50-billion in assets.

His approach has been considered unorthodox, even contrarian. Over time Mr. Bushell, 46, has passed up “sexy” commodities and riskier small caps for what he calls “the boring junk,” including bank stocks, preferred shares, investment-grade corporate debt and high-yield bonds.

“Investors in Canada have really been looking for that sort of predictable income-with-a-little-bit-of-growth type of investment solution,” he explains. “It turned out that the tortoise won the race, big-time.”

Mr. Bushell believes the Canadian market is too small to be restricted by value or growth approaches. “Savers need money managers who can use common sense and can be flexible,” which was the a lesson of the tech-wreck of 2000-2002. “The growth guys had to ride that right over the cliff, and it was completely ridiculous.”

Not focusing on a particular investment style, geography or sector poses a problem for his company, he allows, because “it’s harder to pigeonhole us and explain what we do.”

Signature has had trouble appealing to institutional investors alongside its retail mutual fund business because it “doesn’t fit cleanly into their predefined style boxes,” he explains. Some 90 per cent of its assets are in retail.

Graduating from university with a history degree in the late 1980s, Mr. Bushell earned his Chartered Financial Analyst designation and worked in trade finance before moving into money management and riding the resulting investment boom.

He joined BPI Mutual Funds in 1994 as an analyst and trader and then managed a small dividend fund that grew to become one of BPI’s largest funds. It was a time when “risk-free yields were not nearly as interesting,” he says, which pushed Canadian savers into mutual funds.

Massive sales plus market growth created a “huge opportunity” for those in the business, he remembers. “I tacked my sailboat right at the moment to capture that lift. That was just a total fluke. I worked hard, and all that, but the timing was pretty exquisite.”

Becoming a portfolio manager, he was instrumental in developing and managing a high-income fund (today the $10-billion Signature High Income Fund) and a Canadian equity fund (today the $2.5-billion Signature Select Canadian Fund). When BPI Mutual Funds was integrated into CI Investments in 1999, Mr. Bushell joined CI’s Signature team. He was appointed CIO in 2002.

Mr. Bushell was named Morningstar Fund Manager of the Decade in 2010.

What does he sense in the global winds ahead?

“China is contesting the dominance of the U.S. in setting the rules for the global economy, and Russia is outright contesting the U.S. domination of the geopolitical sphere,” Mr. Bushell says. “It’s an interesting moment.” He expects a lot of low-cost capital to be made available for infrastructure investments in Asia, which will add to the competitiveness, productivity and prosperity of the region.

“We need to be taking our clients to participate in that,” he says, noting that Signature recently opened an office in Hong Kong. “The real future growth story is an Asian growth story, and we want to build relationships with issuers and with the investment banks in the region, and we want to deploy more capital over there.”

Mr. Bushell’s investment advice right now?

“Understand that large emerging-market economies are experiencing financial and economic stress – from Brazil to Turkey and Russia and South Africa,” he says, predicting that these stresses will magnify.

“Financial volatility will be recurring; this means be careful and diversified, with a bias away from cyclical growth-sensitive assets like resources.”

His funds have “done quite well” recently, although there is “fragility in markets” he says, which makes balance critical. “Hedge yourself with a little bit of fixed income, not just equities. … Spread it around, be careful. Own some credit, own some corporate debt. That still looks pretty okay.”